Gaming DAO Merit Circle, YGG ‘Terminate Relationship’

Merit Circle members had proposed canceling YGG’s investment in the organization because of a lack of perceived added value. Now the two are parting ways.

AccessTimeIconJun 14, 2022 at 3:33 p.m. UTC
Updated Jun 14, 2022 at 3:51 p.m. UTC

Two of the largest names in the play-to-earn scholarship space have decided to part ways after seven months.

Members of Merit Circle voted to terminate their relationship with Yield Guild Games (YGG), buying out the guild's 175,000 USDC ($175,000) investment in the play-to-earn gaming decentralized autonomous organization (DAO) for 1.75 million USDC.

YGG and Merit Circle offer play-to-earn gamers so-called scholarships. Gamers, almost always in developing countries, borrow the non-fungible token (NFT) that serves as the entrance fee for the game. As part of the deal, the gamers remit yield back to the NFT’s owners as they play.

“Collaboratively, Merit Circle Ltd and Yield Guild Games came to an agreement,” YGG wrote in a Medium post. “The proposed solution terminates the formal relationship between the Merit Circle DAO and Yield Guild Games. This space would not be where it is today without Yield Guild Games, and not without the Merit Circle DAO.”

In May, the two play-to-earn scholarship giants were caught in a governance strife as members of the Merit Circle DAO said YGG was not adding enough value as an investor and proposed "refunding" the investment. For its part, YGG said the investment, which closed last October, never required anything more than a capital infusion.

As community members pointed out in May, there’s no legal mechanism to "refund" an investor's contribution. It would need to be bought out at a mutually agreeable price.

The entire crypto gaming industry and related play-to-earn scholarship DAOs have faced strong headwinds during the last quarter as earnings on games like Axie Infinity drop.

Axie Infinity’s AXS token is currently trading for $14.33, down 33% during the last month, according to CoinGecko. It began the year just shy of $100. Meanwhile, YGG’s token is currently trading at $0.40, down 38% month on month, while Merit Circle is trading at $0.80.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.